Raamdeo Agrawal
Motilal Oswal, the QGLP framework
IndiaRaamdeo Agrawal is a top Indian investor known for his value-growth approach. He has built a successful fund called QGLP by finding undervalued companies with strong futures. His edge comes from deep research and patience.
In simple termsRaamdeo Agrawal is like a smart detective who looks for companies that are strong, fair, and have good plans. He buys them when they're not too expensive and waits patiently to see if they grow.
QGLP
Raamdeo Agrawal's QGLP framework evaluates stocks based on four key factors: Quality, Growth, Liquidity, and Price. A stock must pass all four to be considered for investment.
Why: High ROE indicates that a company is effectively using its equity to generate profits, which is a sign of strong management and competitive advantage.
How to check: Check the company's annual reports or financial websites like Moneycontrol or Bloomberg. Look for Return on Equity (ROE) in the income statement.
Why: Consistent revenue growth shows that a company is expanding and can sustain its operations over time.
How to check: Look at the company's annual reports or financial websites. Find the revenue figures for the past three years and calculate the average annual growth.
Why: Higher market cap companies are generally more stable and have better access to capital, making them less risky for long-term investment.
How to check: Check the stock's page on BSE or NSE. Look at the Market Capitalization (Market Cap) listed there.
Why: A lower P/E ratio suggests that a stock is undervalued relative to its earnings, making it potentially more attractive for long-term investors.
How to check: Look at the company's financials on Moneycontrol or Bloomberg. Find the Price-to-Earnings (P/E) ratio.
ROE = Net Income / Shareholders' EquityThis tells you how much profit a company generates with the money shareholders have invested. A higher ROE is better.
Example: If a company has a net income of ₹100 crores and equity of ₹500 crores, its ROE is 20% (100 / 500 = 0.2).
P/E = Market Price per Share / Earnings per Share (EPS)This tells you how much investors are willing to pay for every rupee of a company's earnings. A lower P/E may indicate a better value.
Example: If a stock is priced at ₹100 and the EPS is ₹5, then the P/E ratio is 20 (100 / 5 = 20).
- 1Check if ROE has been above 15% for the last three years.
- 2Check if revenue growth has been above 10% in each of the last three years.
- 3Check if market capitalization is over ₹5,000 crores.
- 4Check if P/E ratio is below 20.
Let's say we are evaluating a hypothetical company called 'TechCorp'. 1. Check ROE: TechCorp has an ROE of 18%, 17%, and 16% over the last three years — passes. 2. Check revenue growth: Revenue grew by 12%, 13%, and 14% in each year — passes. 3. Check market cap: Market cap is ₹6,000 crores — passes. 4. Check P/E ratio: P/E is 18 — passes. Conclusion: TechCorp meets all four QGLP criteria, so it would be considered for investment.
- Start by learning how to read financial statements and understand basic ratios like ROE, revenue growth, market cap, and P/E ratio.
- Use free tools like Moneycontrol or Bloomberg to look up stock data.
- Practice screening stocks using the QGLP framework on a few companies each week.
- Read Raamdeo Agrawal's interviews and writings to understand his investment philosophy better.
Philosophy & core principles
Raamdeo believes that markets are not always fair, and sometimes good companies get ignored or misunderstood. He thinks it's better to buy a company when others don't want it, because then you can make more money later. He also believes in the power of long-term thinking — if a company is strong, it will grow over time.
- Invest only in companies that are easy to understand and have clear business models.
- Look for companies with strong financial health and consistent performance.
- Buy when others are scared or not paying attention, because prices can be low then.
- Hold investments for a long time, even if the market is volatile.
- Never invest in something you don't believe in or don't understand.
Signature concepts
This means looking for companies that are not expensive (value) but also have good chances to grow in the future (growth). Raamdeo likes companies that are cheap now but will become more valuable over time.
This is when you buy a company at a price much lower than what it's really worth. It gives you room to be wrong or for the market to change, and still make money.
A moat is something that makes a company better than its competitors, like a strong brand, low costs, or exclusive rights. Raamdeo looks for companies with wide moats because they can keep making money even when the economy is tough.
The step-by-step process
How they actually go from a blank page to owning a stock.
- 1Find simple businesses
Raamdeo only invests in companies that are easy to understand, like those in industries he knows well. He avoids complicated or confusing businesses.
- 2Check financial health
He looks at a company's balance sheet and income statement to see if it has strong profits, low debt, and good cash flow. This helps him know if the company is stable.
- 3Look for undervaluation
Raamdeo compares a company's stock price with its real value. If the price is much lower than what it's worth, he sees an opportunity to buy.
- 4Assess long-term potential
He thinks about whether the company can grow and stay strong for many years. He wants companies that will be successful in the future, not just today.
- 5Buy with patience
Once he finds a good company at a fair price, Raamdeo holds onto it for a long time. He doesn't rush to sell even if the market goes up and down.
✓ What they look for
- Companies that are undervalued but have strong fundamentals, like a solid business model and good management.
- Businesses with consistent earnings over time, even if they aren't growing fast right now.
- Firms that are not in high-tech or volatile industries, but instead in stable sectors like consumer goods or utilities.
- Companies where the price is much lower than what their assets or future profits are worth.
✕ What they avoid
- Stocks of companies with too much debt or unstable earnings.
- Firms that rely on hype or speculation rather than real products or services.
- Industries that are highly competitive and have no clear winner, like some parts of the tech sector.
- Companies where management is not trustworthy or has a history of poor decisions.
How they weigh & manage a position
- Price-to-earnings (P/E) ratio — looking for low P/E stocks that are undervalued.
- Return on equity (ROE) — checking if companies make good returns from their own money.
- Debt-to-equity ratio — avoiding companies with too much debt.
- Free cash flow — ensuring the company has enough cash to run and grow.
- Dividend yield — looking for companies that pay regular dividends.
Raamdeo sells a stock if it becomes overvalued, meaning its price goes up too much compared to what it's worth. He also sells if the business fundamentals change for the worse, like poor earnings or bad management decisions. He doesn't hold onto stocks just because they went up — he focuses on value and long-term performance.
He tends to invest in a few strong companies rather than spreading money too thin. This means he puts more money into his best ideas but also keeps an eye on risk by not putting all his money into one stock. He believes in concentration when the opportunity is right, but always with careful research.
Famous trades
Raamdeo saw that ITC was undervalued despite being a strong company with stable earnings. He invested and benefited as the stock gradually increased in value over time.
He identified Bajaj Finance as a well-managed company with good growth potential, even when others were skeptical. His investment paid off as the company grew and its stock price rose.
“Invest in what you understand — don't chase trends or hot stocks.”
“The best investments are those that give you peace of mind over time.”
“Price is what you pay; value is what you get.”
What to read to learn this approach
- 📖The Intelligent Investor — Teaches the importance of long-term thinking, avoiding speculation, and focusing on fundamentals — key ideas Raamdeo lives by.
- 📖Security Analysis — Helps understand how to evaluate companies based on financial health and management quality, which is central to Raamdeo's approach.
Apply it yourself
An ordinary investor can start by looking for simple, stable companies with good earnings and low prices. Use basic ratios like P/E and ROE to find undervalued stocks. Avoid chasing trends or high-growth tech stocks unless you understand them well. Invest in a few strong companies after careful research, and hold them if they remain undervalued.
Educational summary of a well-known investor's publicly-described approach. Not investment advice, and not affiliated with or endorsed by the investor.